S&P: PH rating upgrade depends on reforms
MANILA, Philippines — Global credit rating agency Standard and Poor's (S&P) said the Philippines' debt rating may be upgraded anew if reforms to shore up revenue and investments are sustained.
S&P upgraded the Philippines' long-term sovereign foreign currency rating by a notch from BB+ to BBB-, the minimum investment grade, in May.
It was the second investment grade rating for the country. The country also won an investment grade rating from Fitch Ratings in March.
“We may raise the ratings on evidence of government revenue reforms that facilitate needed improvements in physical and human capital, and institutional and structural reforms that boost private sector investment, including FDI (foreign direct investments),” S&P said in its latest report called “Supplementary Analysis: Philippines.”
The debt watcher said the outlook on the country’s economy remains stable on the account of its ability to maintain current account surpluses and keep both budget deficit and inflation low.
“The stable outlook balances the Philippines' policy flexibility afforded by current account surpluses and low deficits and inflation against the difficulties of alleviating numerous structural impediments to higher growth,” it noted.
S&P said the Philippines' foreign currency debt now accounts for 36% of the country's outstanding debt, down from 50% a decade ago.
The ratings agency however also warned of a possible credit downgrade. "We may lower the ratings if the Philippines' external performance weakens significantly and external inflows prove difficult to manage and spur overheating in the economy that contributes to banking pressures."
Political developments affecting governance, along with possible trouble in any of the local conglomerates, may also trigger a rating downgrade. – Rappler.com